Pharmacists Can Expect Key Shift in Rx Payments in 2006

Ken Rankin

Published Online: Sunday, May 1, 2005

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The nation's community pharmacists
can expect to see significant
growth in the demand for prescription
drugs next year, but they can also count
on a major change in the source of
payments for those medicines, according
to a new report from the Centers for
Medicare and Medicaid Services (CMS).

Out-of-pocket spending for prescription
products, which has been rising by
6% to 8% annually in recent years, will
actually decline during 2005 by 1.5%,
according to CMS. Behind that shift is
the new Medicare prescription drug
benefit, which is scheduled to begin
covering Rx costs for millions of American
seniors starting January l, 2006.

At the same time, the proportion of
total US drug spending covered by
Medicare is expected to jump dramatically,
from only 2% of the total dollar
market this year to 28% of the market
in 2006, the report noted.

The good news: researchers for CMS
concluded that while the new Medicare
Rx program will "significantly
increase prescription drug use and
reduce out-of-pocket spending for seniors,"
it will not cause any major
increase in US health care spending.

That is because "price discounts associated
with the new benefit will nearly
offset the increased utilization associated
with extending insurance coverage
to the Medicare population," CMS said.

The bottom line: the higher Medicaid
drug spending that is expected to
start next year is projected to add only
0.5 percentage points to the total drug
spending growth rate in 2006all of it
resulting from greater utilization of
prescription drugs due to lower drug
prices and better drug coverage, the
report concluded.